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Recommended Practice

Total CostManagement®

Framework:

T&+a# C&*+Ma%age$e%+ * a*3*+e$a-c a'')&ach

+& $a%ag%g c&*++h)&/gh&/+ +he #fe

c3c#e &f a%3 e%+e)')*e7 ')&g)a$7 fac#+37 ')&!ec+7 ')&d/c+ &) *e)0ce:

AACE;* flag*h' '/b#ca-&%7 +he TCM F)a$e1&)"9 A% I%+eg)a+edA'')&ach +& P&),&7 P)&g)a$ a%d P)&!ec+ Ma%age$e%+7 * a*+)/c+/)ed7 a%%&+a+ed ')&ce** $a' +ha+ f&) +he fi)*+ -$e e2'#a%* each

')ac-ce a)ea &f +he c&*+ e%g%ee)%g fie#d % +he c&%+e2+ &f +*)e#a-&%*h' +& +he &+he) ')ac-ce a)ea* %c#/d%g a##ed ')&fe**&%*:

Visual TCMFramework:

V*/a# TCM g)a'hca##3de$&%*+)a+e* +he

%+eg)a-&% &f +he*+)a+egc a**e+

$a%age$e%+ a%d')&!ec+ c&%+)*')&ce** $a'* &f +he TCM F)a$e1&)": The V*/a# TCM a''#ca-&% ha*bee% de*g%ed +& ')&0de a d3%a$c 0e1 &f +he TCM ')&ce**e*7 f)&$+he &0e)a## *+)a+eg3 ')&ce** $a'* +& +he $d?#e0e# ')&ce**e* a%d

de+a#ed ac-0-e*: The ')&ce**e* a)e h3'e)#%"ed7 g0%g +he /*e) +heab#+3 +& $&0e +& a%d f)&$ )e#a+ed ')&ce** $a'* a%d )efe)e%ce


Th* Rec&$$e%ded P)ac-ce RP * b)&/gh+ +& 3&/ a*'/b#c *e)0ce b3 AACE I%+e)%a-&%a#7 +he A/+h&)+3 f&)T&+a# C&*+ Ma%age$e%+:

The AACE I%+e)%a-&%a# Rec&$$e%ded P)ac-ce* a)e+he $a% +ech%ca# f&/%da-&% &f &/) ed/ca-&%a# a%d

ce)-fica-&% ')&d/c+* a%d *e)0ce*: The RP* a)e a *e)e*&f d&c/$e%+* +ha+ c&%+a% 0a#/ab#e )efe)e%ce%f&)$a-&% +ha+ ha* bee% */b!ec+ +& a )g&)&/* )e0e1

')&ce** a%d )ec&$$e%ded f&) /*e b3 +he AACE

I%+e)%a-&%a# Tech%ca# B&a)d:

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I%+e)%a-&%a# ')&0de* +* $e$be)* a%d *+a"ehde)*1+h +he )e*&/)ce* +he3 %eed +& e%ha%ce +he)'e)f&)$a%ce a%d e%*/)e c&%-%/ed g)&1+h a%d

*/cce**: W+h &0e) 7DD $e$be)* 1&)#d?1de7 AACEI%+e)%a-&%a# *e)0e* +&+a# c&*+ $a%age$e%+')&fe**&%a#* % a 0a)e+3 &f d*c'#%e* a%d ac)&** a##

%d/*+)e*: AACE I%+e)%a-&%a# ha* $e$be)* % c&/%+)e*: If 3&/ *ha)e &/) $**&% +&

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$a%age$e%+: C&$')ehe%*0e7 1e## &)ga%4ed7 a%d -$e#37 each PPG * a

c#ec-&% &f *e#ec+ed a)-c#e* c&0e)%g a 'a)-c/#a) +ech%ca# +&'c a)ea&) %d/*+)3 *eg$e%+: The PPG* ')&0de a% e2ce##e%+ *&/)ce &f )efe)e%ce$a+e)a# a%d * a 1e#c&$e add-&% +& a%3 )efe)e%ce #b)a)3:

Certification:

S%ce KH7 AACE ha*

bee% ce)-f3%g%d0d/a#* a* Ce)-fiedC&*+ C&%*/#+a%+*CCC>Ce)-fied C&*+

E%g%ee)* CCE8Ce)-fied C&*+Tech%ca%* CCT8

Ce)-fied E*-$a-%g P)&fe**&%a#* CEP8 Ce)-fied F&)e%*c C#a$*C&%*/#+a%+* CFCC8 Ea)%ed Va#/e P)&fe**&%a#* EVP8 a%d P#a%%%g Sched/#%g P)&fe**&%a#* PSP: I% +he $d*+ &f *+agge)%g b/*%e** a%d

ec&%&$c +/)$&#7 3&/ %eed a## +he +&* a+ 3&/) d*'&*a# +& he#' *h&)e/' 3&/) ca)ee) ')&*'ec+*: AACE ce)-fica-&% ca% he#' 3&/ a%d +he&)ga%4a-&%* +ha+ )e#3 &% 3&/ f&) he#'5

Online Learning

Center:

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')e*e%+a-&%* ca'+/)ed

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a+ a */b?')&ce** &) f/%c-&%a# #e0e#: V*/a# TCM * a0a#ab#e +& $e$be)*a+ %& e2+)a fee:

Virtual Library:

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c#ec-&% &f &0e) DDDc&$'#e+e +ech%ca#a)-c#e* &% 0)+/a##3

e0e)3 a*'ec+ &f c&*+e%g%ee)%g: Sea)ch+h* e2+e%*0e da+aba*e a%d $$eda+e#3 )e+)e0e +he be*+ +ech%(/e*

a%d '&+e%-a# */-&%* +& +he ')&b#e$* c&%f)&%-%g 3&/ a%d 3&/)&)ga%4a-&%:

ProfessionalPractice Guides(PPGs):

P)&fe**&%a# P)ac-ceG/de* c&%+a% +he

$&*+ 1&)+h1h#ec&%+)b/-&%* +& +hefie#d &f +&+a# c&*+

Recommended Practice Recommended Practice

http://www.aacei.org/educ/cert/http://www.aacei.org/resources/vl/http://www.aacei.org/resources/ppg/https://live.blueskybroadcast.com/bsb/client/CL_DEFAULT.asp?Client=502522http://www.aacei.org/mbr/how2join.shtmlhttp://www.aacei.org/mbr/how2join.shtml

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DiscussionForums:

The d*c/**&% f&)/$*

e%c&/)age +hee2cha%ge &f +h&/gh+*a%d dea*7 +h)&/gh'&*-%g (/e*-&%* a%d

d*c/**%g +&'c*: The3')&0de a g)ea+ $ea%* f&) %e+1&)"%g a%d %+e)ac-&% 1+h 3&/) 'ee)*:

Pa)-c'a+e a%3-$e a+ 3&/) c&%0e%e%ce a%d )ece0e a/+&$a-c e?$a#%&-fica-&%* &% +&'c* +ha+ a)e &f %+e)e*+ +& 3&/: W+h *e0e)a# +h&/*a%d/*e)*7 f 3&/ ha0e (/e*-&%* &) c&%ce)%* ab&/+ a +ech%ca# */b!ec+7')&g)a$7 &) ')&!ec+ ? +he f&)/$* a)e a g)ea+ )e*&/)ce f&) 3&/:

MentoringProgram:

L&&"%g +& ga% $&)e

"%&1#edge f)&$ a%e2'e)e%ced')&fe**&%a# &) a%

&''&)+/%+3 +& he#'

a%&+he) ')&fe**&%a#6I%c#/ded 1+h 3&/) $e$be)*h'7 AACE &ffe)* a c&$')ehe%*0e

$e%+&)%g ')&g)a$ f&) %d0d/a#* %+e)e*+ed % *ha)%g "%&1#edge 1+h&+he)* &) ad0a%c%g +he) &1% ca)ee)* +& +he %e2+ #e0e#:


a+ &/) A%%/a# Mee-%g*: Each )ec&)ded /%+ %c#/de* a #0e a/d&

)ec&)d%g &f +he *'ea"e) *3%ch)&%4ed +& +he *#de* acc&$'a%3%g +he')e*e%+a-&%: Each /%+ %c#/de* +he +ech%ca# 'a'e) a**&ca+ed 1+h +he')e*e%+a-&%7 a%d a d&1%#&adab#e a/d&?&%#3 0e)*&% +ha+ 3&/ $a3 '#a3

&% 3&/) $&b#e de0ce &) P&d: C&$'#e-&% &f each /%+ ea)%* D: AACE)ece)-fica-&% c)ed+* :e: D: CEU*: A% e#ec+)&%c ce)-fica+e &f c&$'#e-&% 1## be a.ached +& 3&/) ')&fi#e:

Conferences:

AACE I%+e)%a-&%a#;*A%%/a# Mee-%g b)%g*

+&ge+he) +he %d/*+)3;*#ead%g c&*+')&fe**&%a#* % a

f&)/$ f&c/*ed &%#ea)%%g7 *ha)%g7 a%d%e+1&)"%g: O0e) DD

h&/)* &f +ech%ca# ')e*e%+a-&%* a%d a% %d/*+)3 +)ade*h&1 +ha+ 1##cha##e%ge 3&/ +& be.e) $a%age7 '#a%7 *ched/#e7 a%d $'#e$e%++ech%&g3 f&) $&)e effec-0e a%d effice%+ b/*%e** ')ac-ce*:

The I%+e)%a-&%a# TCM C&%fe)e%ce * a *$#a) e0e%+ +ha+ * he#d &/+*de&f N&)+h A$e)ca @ c&$'#e+e 1+h +ech%ca# ')e*e%+a-&%*7 *e$%a)*

a%d e2hb+*:


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Periodicals

Me$be)* )ece0e ac&$'#$e%+a)3*/b*c)'-&% +& +he

C&*+ E%g%ee)%g !&/)%a#7 AACE;*b?$&%+h#3

')&fe**&%a##3'ee)?)e0e1ed '/b#ca-&%: I+ c&%+a%* be*+?%?c#a** +ech%ca# a)-c#e* &%

+&+a# c&*+ $a%age$e%+ )e#a+ed */b!ec+*:I+ * '/b#*hed a* b&+h a ')%+ 0e)*&% a%d a% &%#%e 0e)*&%:

O/) b?$&%+h#3 dg+a# '/b#ca-&%7 S&/)ce7 f&c/*e* &% AACE ac-0-e*a%d +e$* &f %+e)e*+ +& +he +&+a# c&*+ $a%age$e%+ c&$$/%+37 1+h

*'eca# fea+/)e* f&) &/) $e$be)*:


Career Center:

AACE;* ca)ee) ce%+e)')&0de* +&* a%d)e*&/)ce* f&) 3&/ +&

')&g)e** +h)&/gh 3&/)ca)ee):

L&&"%g f&) +he %e2+)/%g &% +he ca)ee) #adde) &) +& h)e +he +a#e%+ %ece**a)3 +& +a"e 3&/)

fi)$ +& +he %e2+ #e0e#6 J&b *ee"e)*7 /*e &/) *e)0ce* +& fi%d 3&/) %e2+ !&b @ '&*+ 3&/) )e*/$e7 ge+ e?$a# %&-fica-&%* &f %e1 !&b?'&*-%g*7a%d $&)e: E$'#&3e)*7 '&*+ 3&/) c/))e%+ !&b?&'e%%g* a%d *ea)ch &/)e2+e%*0e )e*/$e da+aba*e +& fi%d 3&/) %e2+ *+a) e$'#&3ee:

Salary andDemographicSurvey:

C&%d/c+ed a%%/a##37*a#a)3 */)0e3 * a g)ea+)e*&/)ce f&)

e$'#&3e)* +ha+ 1a%+

+& ga% a be.e)/%de)*+a%d%g &f +he c&$'e--0e $a)"e+'#ace f&) +a#e%+ a%d f&)

e$'#&3ee* %+e)e*+ed % "%&1%g h&1 +he) c&$'e%*a-&% c&$'a)e*1+h +he) 'ee)* % +he ')&fe**&%:


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Copyright 2004 AACE, Inc. AACE International Recommended Practices

AACE International Recommended Practice No. 22R-01

DIRECT LABOR PRODUCTIVITY MEASUREMENT – AS APPLIED IN CONSTRUCTION AND MAJOR MAINTENANCE

PROJECTSTCM Framework: 9.2 – Progress and Performance Measurement

Acknowledgments:Hans E. Picard, (Author)Charles E. Bolyard, Jr.Robert C. Creese, PE CCEEarl T. Glenwright, Jr.

Stephen M. Jacobson, CCCRichard A. Selg, CCERonald M. WinterJames G. Zack, Jr.

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Copyright 2004 AACE International, Inc. AACE International Recommended Practices

AACE International Recommended Practice No. 22R-01

DIRECT LABOR PRODUCTIVITY MEASUREMENT – AS APPLIED IN CONSTRUCTION AND MAJOR MAINTENANCEPROJECTS TCM Framework: 9.2 – Progress and Performance Measurement

April 26, 2004

INTRODUCTION

This recommended practice of AACE International describes a direct method to measure, monitorand optimize construction and maintenance project labor productivity. The method described is statisticalsampling of the work process, or: work sampling. The work process is made up of steps and activities thattake input resources, add value, and produce the completed project. Understanding the capability of theprocess, or ‘management system,’ to produce efficiently is important for project planning and control.Sampling is a cost-effective way to provide information about the performance of the work process, i.e.,about ‘how’ the work is done, and how to do it better. Work sampling complements conventional projectmanagement methodology, which typically tracks ‘what’ work is done.

Sampling provides project managers, supervisors, and the workforce with objective feedback re: theefficiency of the work process (not of individual workers, which is part of the foreman’s job) – and theability to respond quickly to adjust. In addition, it provides a measure of management’s ability to

effectively plan, coordinate, and control project execution. Analysis of the sampling data allows for promptremoval or reduction of roadblocks, optimizing the construction work process through redesign andinnovation. Streamlining the work process ensures that performing productive work is made moreconvenient for the workforce, ensuring that, at all times, crafts and technicians have all the necessarytools, materials, parts, supplies, information, supervisory support and personal needs readily available.Work sampling, properly applied, recognizes that productivity results from an optimal work process, i.e.,from ‘managing smarter,’ not from people working harder.

Construction labor productivity is a measure of work process efficiency. It can be defined as the ratioof the value labor produces to the value invested in labor. Productivity increases as needed laborresources are minimized and wasted efforts eliminated from the work process. This definition and thepractice covered here treats productivity as a direct, absolute measure to be optimized.

PURPOSE OF DIRECT MEASUREMENT

The purpose of construction and maintenance project work sampling is to measure and assess thework process, and provide useful, (near) real-time information about the process. It is a tool to enablemore efficient, safe completion of the work scope so that fewer labor-hours will be expended thancustomary.

Systematic statistical observation of general work activity on the project site is useful to:

1. determine the proportion of direct labor hours being wasted in non-productive activity and delays,and productive work activity;

2. analyze factors that cause non-productive activity and delays; and3. identify opportunities to reduce non-productive activity and delays.

As part of its discipline, work sampling enables cost management to affect productivity improvementon labor-intensive construction and maintenance projects. Work sampling on a project helps monitor thework activity to obtain an overall picture of the utilization of the workforce. With statistically soundsamples, inferences can be made regarding constraints to the flow of work and resulting inefficiencies inthe process. Consistent application of sampling over a period of time provides project managers ongoinginformation about the effectiveness of actions taken to continuously improve the work process.

Analysis of the (estimate-independent) data quantifies non-productive activity and identifies possiblecausative factors, suggesting corrective action. Work sampling provides managers and supervision quick,

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Direct Labor Productivity Measurement –- As Applied in Construction and Major MaintenanceProjects

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actionable feedback on work process performance – insight that cannot be obtained by conventionalproject control metrics. Conventional productivity measures tell when productivity problems occur, butwork sampling also tells why – the methods complement each other.

The actual, project-specific, quantitative data obtained by work sampling ensures objective

assessment of the work process. As such, the data supports benchmarking and continuous improvementof efficiency and productivity. Properly applied, it is effective in getting more construction or maintenancework done with fewer labor-hours, and with greater worker safety and satisfaction.

BACKGROUND ON PRODUCTIVITY, EFFICIENCY AND WORK SAMPLING

Construction and maintenance project performance is an important concern of project owners,constructors, and cost management professionals. Project cost and schedule performance dependlargely on the quality of project planning, work area readiness preparation – and the resulting productivityof the work process made possible in project execution. Labor productivity is often the greatest risk factorand source of cost and schedule uncertainty to owners and contractors alike.

Construction and major maintenance projects are commonly managed and controlled throughoversight and coordination. At intervals, progress is tracked against agreed-upon schedules and budgets

– which are estimated, based largely on historical performance data. This method may be effective forhighlighting when performance is not on track with plans. But it does not show why productivity is laggingor out of control, nor does it support decisions on corrective actions and improvement of the workprocess. As such, traditional project control measures do not fully address the objective of improving costand schedule performance. For meaningful cost and schedule optimization, direct productivitymeasurement must be used to complement the indirect, relative control measures that compareperformance to the estimate.

Breakthrough lessons learned by US manufacturing in the 1980s showed that managers must takeresponsibility for the majority of work process (‘system’) performance problems. It is management's job toplan, develop, and continually ensure an efficient work process – the workforce works within theboundaries of the process.

These lessons also apply to the construction industry – raising the productive use of labor-hours byapplying process measurement, analysis and improvement results in better productivity, efficiency andcost effectiveness. Using statistical techniques, such as statistical process control (SPC), and Six Sigma(focus on process variation) many firms were able to radically increase productive efficiency and quality –theirs and their vendor’s.

Work sampling is a statistical technique that can be effectively used for analyzing the constructionand maintenance work process. Proportions of time devoted by crafts and technicians to the variety ofwork activities, and the variability of the work process are measured. The application has proven effectiveon hundreds of construction and maintenance projects, achieving labor cost savings of 20 to 30 percent,and more.

Work sampling has been widely used to periodically make studies of industrial operations. Originallyused in the textile industry in the U.K., it was introduced in the US during the World War II effort to obtaininformation about men or machines. A fact-finding tool, it was called "snap-reading" method – referring tothe instantaneous recording of observation of activities being studied. The method provides processinformation quickly and at less cost than other means. The technique has been used in one form oranother by different groups for different reasons, although sometimes unfortunately misused, e.g., as away to ‘blame’ the workforce for low productivity.

Observations must be random and free of bias, or systematic observation errors that tend to run inthe same direction. Consistently carried out according to definitions and procedures, sampling results will

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differ from actual conditions only in a random manner and will be unbiased. The greater the number ofobservations, the more accurately will sampling results approximate actual conditions.

Advantages of the work sampling method are:

1. Random observations are made of overall project work activity of groups of workers, collectivelyobserved at randomly selected areas and times, not of specific individual workers.

2. Sampling causes less anxiety and tension among workers than continuous observation (such aswith a stopwatch).

3. There is no, or minimal, interference with the worker’s normal activities.4. Observers with minimal specialized training can conduct random work sampling.5. The number of observations can be adjusted to meet desired levels of accuracy.6. Work sampling is an effective means of collecting useful facts during project execution that are

not normally collected by other methods.7. Work sampling is less expensive than continuous observation techniques.

WORK SAMPLING THEORY

Work sampling is based on probability theory. This means that activity samples observed at randomfrom a large group of craft activities on a project tend to have the same pattern of distribution as that ofthe large group. The ratio of the number of observations (samples) of a given activity to the total numberof observations of all activities approximates the percentage of time that the work process spends on thatactivity. If the number of observations is large enough, the percentage of time found by work samplingspent on an activity will differ little from the actual time spent on that activity in the work processdeveloped on the project site.

A sufficient number of observations must be taken to ensure accuracy. Although the procedure iseasy to learn, it is important that sampling tours are conducted randomly, without bias. Every worker onevery assignment during each work period should have an equal chance of being observed on each worksampling tour.

A fundamental principle of work sampling is that the number of observations is proportional to thepercentage of time the work force is engaged in an activity such as, for example, ‘working’. A sample of

size N is taken to estimate the proportion P . According to elementary sampling theory, we cannot expect

the proportion based on a sample ( p) to be the true value of P . But we can expect the value of p to be

within the range of P ± 2σ (‘sigma’ is the symbol for standard deviation) approximately 95 percent of the

time at a (selected) 95 percent confidence level. With P as the true percentage to be determined, the p of

any sample can be expected 19 times in 20 to fall within the limits of P ± 2σ by chance alone.

As the number of observations N increases, the sampling error diminishes, i.e., the value p gets

closer to the true value of P . The absolute accuracy is the difference between the observed percentage p

and the true value P (relative accuracy is this difference expressed as a percentage of the observed

percentage). Absolute accuracy of resulting data can be calculated with this formula:

( ) N p p Z A −= 1 (1)

Where:

A = absolute accuracy

Z = number of standard deviations σ (for the 95 percent confidence level, the value of Z = 2)

p = the observed percentage, obtained by work sampling

N = the total number of work sampling observations made.

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DATA COLLECTION AND TREATMENT METHODOLOGY

Work sampling requires routine data collection by trained construction or maintenance analysts

observing the entire workforce on-site (with some exceptions discussed later). Random-walk observationtours must be conducted at randomly selected times during all work periods, excluding periods when nowork takes place, such as end-of-shift clean-up periods, or break periods (if crews all break at specificallyscheduled break times), and tour starting points must be varied to the extent possible.

Craft activities are manually recorded according to specific activity category classifications, which arepre-defined and may be customized for the specific construction or maintenance project. Covering theentire labor workforce on-site, each worker is counted as one sampling observation. A samplingobservation is an observation of work activity at the very instant the analyst observes the activity on awork sampling observation tour.

Before the start of each observation tour, the analyst determines and documents crew size(s), theirforeman, and their work area(s) to ensure the entire workforce will be observed. An analyst impersonally

observes and records all craft and foreman activity occurring on the project by placing tick marks on adata collection form (such as the “Data Collection Form” in Appendix B), and also records the number ofcraft workers not observed on-site (‘un-accounted for’).

Using statistical software, the percentage of observations of each activity category is computed. Theresulting data shows the overall crew utilization for the period work sampled and may be printed outgraphically, e.g., in pie chart format. By applying the proportions of value-added and non-value-addedactivity to the total labor-hours available, the time spent on each category can be determined. A print-outof a scatter diagram of, e.g., the percentage of productive utilization (‘direct work’) versus the tour starttimes, is a practical way to graphically verify randomness and determine variation of the work process.The software will calculate the mean (average) level of productive activity and the standard deviation forthe overall process.

Improvement constitutes raising the level of efficiency of the work process and reducing its variability. Analyzing the work process measurement data allows decision-makers to take prompt appropriate actionand remove systemic constraints and obstacles that interfere with best possible, productive utilization ofthe craft labor resources.

Working in support of owner and/or contractor project management, cost management helps identifyopportunities to cause improvement and recommend streamlining and/or re-design of the work process,and establishing guidelines for project-specific best practices including:

1. On-going measurement, analysis and optimization of productive labor utilization;2. Prompt feedback (e.g., no later than end of shift) on work process efficiency;3. Analysis of process trend and variability data taken over time;4. Assessment of work process performance vs. baseline and industry benchmarks;5. Up-front planning and preparation with the objective of most efficient workflow;6. Updating historical estimating databases for future ‘lean’ estimating;7. Regular review and audit of soundness of implementation of this practice.

GETTING BUY-IN OF WORK SAMPLING

Before starting work sampling, the use of the method must be ‘sold’ to all personnel at all levels oforganizations affected, including top management, supervision and, if present, union representatives.Work sampling is a tool to make it more convenient for crafts to carry out assigned tasks by streamlining

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procedures and removing roadblocks. It is management’s responsibility to eliminate or minimize factorsthat limit productivity on the project.

Typically, 15-minute briefings of field supervision and union representatives are effective. Craftworkers can be briefed on basic work sampling procedure during hiring-in procedure, e.g. by means of a

short, custom-prepared video which ensures consistency of presentation. It is important to explain theimpersonal data collection procedure, the activity definitions, and how the sampling results are used toshow the efficiency of the work process.

Focusing on the efficiency of the construction work process introduces a new, effective way ofmanaging construction projects at improved cost-effectiveness.

PLANNING IMPLEMENTATION OF WORK SAMPLING

After briefings to explain the work sampling procedures and activity definitions, and obtaining buy-inby management, supervision and workforce, a detailed plan is needed before conducting work samplingtours of the site.

1. Determine desired accuracy of the results and specify the level of confidence, e.g. a relativeaccuracy of ± 5% at a 95 percent confidence level is practical and usually adequate.

2. Next, determine the required number of observations to achieve the desired accuracy, e.g., byusing a statistical accuracy look-up table, an example of which is included in Appendix H.

3. Based on the anticipated observation tour time to cover the workforce on-site, determine the dailynumber of work sampling tours needed to achieve the required number of observations.

4. Subsequently, design the work sampling form on which to record the observations. An example isincluded in Appendix B.

IMPLEMENTING RANDOM WORK SAMPLING

Implementation on construction or maintenance project sites includes the following activities anddeliverables:

1. Conduct up-front briefings to ensure management, supervision and workforce buy-in beforestarting measurement of work activity.

2. Determine which jobs on the site to exclude from the work sampling. It may not be cost effectiveto observe a small crew working in a remote area, requiring a great deal of travel time to observe.In such case it may be more practical to keep this small number of workers out of the sampling.(Note that the resulting data only reflects actual observations made in work areas included in thesampling).

3. Measure workforce utilization by observation of the entire workforce on-site (except jobs that areexcluded because of distance from the main work area).

4. While conducting work sampling observation tours, it is useful to ask the question: “What can bedone to improve productive utilization, reduce wasted time, minimize travel, and streamlineworkflow?”

5. Communicate regularly with field supervision, asking about job locations, manning, existing

procedures such as breaks, tool control, safety meetings, and any constraints or interferences.6. Regularly produce easy-to-read graphic labor utilization reports, e.g. pie charts, trend charts,

scatter diagrams.7. Prepare action recommendations (e.g. an “action item list”) to reduce non-value-added activities

(avoiding “finger-pointing” or “blaming”) for presentation to site project management.8. Offer and be prepared to facilitate team problem solving with select craft and foreman

participation, producing recommendations to management to improve the work process. Include adetermination of the cost-benefit of recommended work process improvement opportunities.

9. Review and update historical estimating database with latest data.10. On request, conduct continuous improvement training workshops.

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Supported by top management, improvement of the work process can cause significant labor cost

and time savings. And, through communication and emphasis on "working smarter", labor representativestypically respond well to the continuous work process improvement approach that makes working more‘convenient’ for the worker.

KEY TERMS AND DEFINITIONS

1) Confidence Level. The probability that the true value that is being estimated by the sample isincluded in a specified range. The desired confidence level is specified by the analyst and theprecision or accuracy range is calculated or looked up in a table. For example, if the desiredconfidence level is 95 percent and the ‘productive utilization’ (or ‘direct work’) is 56 ± 2.5 percent, thenthere is a 95 percent chance that the true ‘productive utilization’ is between 53.5 and 58.5 percent.

2) Accuracy. A range of possible values determined according to the confidence level. When calculatedfrom sample results, the accuracy range has an upper and lower limit within which the sampleestimate might differ from the true value. In work sampling a recommended accuracy range istypically at least ±5 percent (‘relative accuracy’) at a confidence level of 95 percent. The accuracy of

the sampling measurement that is achieved depends on the sample size N and the percentage ofobservations of an activity p.

3) Standard Deviation (sigma, σ). A measure of variability, that is, of the deviation of an activitypercentage average, according to the formula:

(2)

Where:σ = standard deviation

p = percentage occurrence of observed activity (e.g., ‘productive utilization’)

N = total number of observations obtained on work sampling tours.

4) Randomness of observation tours, both of start-time and analyst’s path of observation tour(‘random time/walk’). With a computer-based random times generator or a random times table (see

Appendix G), the analyst randomly selects the start time for an observation tour. Tour start points arerandomized by selecting different start locations and paths taken on the project site. Sampling toursmust be conducted randomly and without bias over the course of all work periods. Every worker onevery assignment during each work period should have an equal chance of being observed on eachwork sampling tour.

The scatter diagram of tour start times during work periods (sample diagram included in Appendix F,showing average direct, productive work percentages and start-times of observation tours, plotted fora specific shift during the course of a construction project) can be used to verify randomness ofobservation, as well as to analyze work process variability.

5) Data Collection Form and Foremen Sheet. Samples are observations obtained by observingworkforce activities, either as groups of workers simultaneously or as individuals working separatelyon the project during observation and classifying the observed activities, impersonally, into pre-defined activity categories. The Data Collection form included in Appendix B is an example of a formthe analyst uses to record observations. The Foreman Sheet in Appendix C is used to recordforemen’s work area location and crew size information, and is used by the analyst to ensurecovering all work areas, foremen and entire workforce.

6) Work Sampling Activity Category Definitions. Workforce activities are distinguished, essentially, inthree major categories: “Productive Work (Utilization)," "Non-productive Work," and "Downtime". Each

N p p )1( −=σ

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Hands-On, 49%

Assist, 7%

Adjust Equipment,

2%

Walk w/

Tools/Materials, 3%

Walk Empty, 12%

Wait at Elevator,

3%

Wait at Tool Crib,

1%

Planning, 5%

Ready, 15%

Personal, 3%

Hands-On

Assist Adjust Equipment

Walk w/

Tools/Materials

Walk Empty

Wait at Elevator

Wait at Tool Crib

Planning

Ready

Personal

of these has its sub-categories, as shown in the pie chart of Figure 1. Work sampling definitions areoften customized to provide actionable information specific to a project or facility. An example ofconstruction work activity definitions is presented in Appendix A. A daily printout of craft labor-hourutilization for a shift would show actual measured percentages in a pie chart format, as shown in

Appendix D.

In addition, the percentage of un-observed workers (‘Un-accounted For’), as well as the total numberof observations (N) can be shown in the daily report.

Figure 1 — Example chart of proportions of labor hour utilization by work category

7) Reports. To be useful and effective, work process measurement data must be reported on a timelybasis. For example, at the conclusion of each shift, a pie chart showing labor utilization for that shiftcan be prepared and presented to project management and supervision, and include posting at craftareas. The pie chart in Appendix D shows some of the possible causative factors that affect activitycategories. An Action Items List can be included, i.e., short notes on the perceived cause and effectof interaction of work activities in the system and interferences in the workflow. The list is regularlyupdated with obstacles or constraints to efficient workflow, observed by the analyst on work samplingtours, or on tours conducted with the specific purpose of identifying workflow problems (when timepermits, between work sampling tours).

DOWNTIME

DIRECT,

PRODUCTIVEWORK

INDIRECT,NON-PRODUCTIVE

WORK

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8) The Action Items List. Can also describe ‘undesirable’ work activity, i.e., activity that is classified asworking but can possibly be eliminated or reduced by improved process. Examples include certaintypes of walking, waiting, cleaning, etc.

An example Action Item List format is included in Appendix I.

Footnote:1. The definition of productivity in AACE International Recommended Practice No. 10S-90 “CostEngineering Terminology” is a “relative measure of labor efficiency, either good or bad, when comparedto an established base or norm…”. That definition applies to productivity ratios such as used in earnedvalue project control practices rather than in the direct measurement of productive workforce utilization forwork process improvement purposes.

REFERENCES

• Failing, Robert G, Jerry L. Jantzen and Larry D. Blevins, 1988, “Improving Productivity Through WorkMeasurement: A Cooperative Approach,” American Institute of Certified Public Accountants, NewYork.

• Harley R. Macklin and Hans E. Picard, "Continuous Improvement of Productivity - How an electric utilityuses work measurement to innovatively manage contractor labor requirements on maintenanceoutages," Cost Engineering, Vol. 34, No. 10, Oct.1992.

• Harrington, H.James, 1991, Business Process Improvement, McGraw-Hill.

• Niebel, Benjamin W., 1993, Motion and Time Study, Erwin

• Picard, Hans E., "Productivity and Value Management on Utility Construction and MaintenanceProjects," Proceedings, Project Management Institute Seminar Symposium, Sep. 1991, Dallas, Texas.

• Picard, Hans E. and C. Robert Seay, Jr., "Competitive Advantage through Continuous OutageImprovement," EPRI Fossil Plant Maintenance Conference, Baltimore, Maryland, July 1996.

• Picard, Hans E., Sc.D., "Industrial Construction Efficiency and Productivity," Transactions, 44th AnnualMeeting of AACE International, June 2000, Calgary, AB, Canada.

• Pitt, Hy, 1994, SPC for the Rest of Us, Addison-Wesley.

• Picard, Hans E., "Construction Performance Benchmarking Measurement," Transactions, 46th Annual

Meeting of AACE International, June 2002, Portland, OR.• Picard, Hans E., "Construction Process Measurement and Improvement", Proceedings, 10th Annual

Conference on Lean Construction, Aug. 2002, Gramado, Brazil.

• DCAA (2002). Defense Contract Audit Agency (DCAA) Document Title: DCAAM 7640.1; DCAA Contract Audit Manual, Vol. 2 ; Jan. 2002 Appendix 1.

CONTRIBUTORS

Hans E. Picard, (Author)Charles E. Bolyard, Jr.Robert C. Creese, PE CCEEarl T. Glenwright, Jr.

Stephen M. Jacobson, CCCRichard A. Selg, CCERonald M. WinterJames G. Zack, Jr.

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APPENDIX A. WORK SAMPLING DEFINITIONS APPLICABLE TO CONSTRUCTION PROJECTS

Direct, Productive Work Activity: using tools or effort at a designated work location to perform anassigned task that makes a direct, productive contribution to completing the work scope. There

are three sub-categories within Direct Productive Work Activity:

1. Hands Ona. Using tools or equipment

• Operating air or electrically driven power tools

• Welding, cutting, brazing, or heating (arc or torch)

• Turning/pulling on a wrench, screwdriver, or other hand tool

• Hammering, filing, sawing, sanding, or polishing

• Sweeping, wiping, buffing, brushing, or applying paint/coating

• Placing or positioning chain falls/slings or scaffolding

• Aligning or positioning parts or materials onto equipment, supports, etc.

• Getting or putting aside tools or parts at the job site

• Feeding wire, cable, line, etc.b. Inspecting

• Observing the operation or condition of equipment to ensure proper functioning

• Using gauges, calipers, meters, or other instruments to measure or test thecondition or operation of equipment, the facility, or circuits

• Using diagrams or schematics for instructional purposes in the work area

• Inspection of quality of completed work, e.g., checking welds, threads,alignments etc.

c. Using equipment or vehicle (e.g., tugger, crane, forklift)

• Lifting, lowering, or positioning load

• Driving/operating rolling equipment (assigned task)d. Support Activities

• Tool crib attendant or tool runner when bringing or handing a tool to another

•

Tool crib attendant or tool runner when working on, adjusting, or repairing equipment• Actively waiting on a weld bead to be passed when tandem welding

2. Assisting

• Passing tools or materials

• Positioning materials, parts, or equipment for another

• Signal man

• Safety related activities such as holding a ladder for another, fire or hole watch,tag line attendant, etc.

• Holding, supporting, or pulling on pipe, part or structural piece for another toperform a task

• Tool crib attendant or tool runner activity when not directly working on tools orhelping another

3. Adjusting Equipment

•

Replacing a cut-off disk or grinding wheel on a hand grinder• Adjusting a torch or arc type welder before making a cut or weld

• Adjusting a torch or arc type welder for another

• Standing by to fix problems during start-ups or difficulties

• Repairing or modifying tools or equipment

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Indirect, Non-Productive Work Activity: support activities that are not directly contributing tocompleting a job or project. These activities include:

1. Walking with tools or materials: transporting (also: walking or riding in vehicle with) parts, tools,materials, or equipment, inside or outside the plant or project.

2. Walking empty: walking or riding (as a passenger in vehicle) empty-handed, inside or outside theplant or project.

3. Waiting for the elevator4. Waiting at the tool crib or stores: Waiting at a store room or tool room/crib for parts, materials, tools,

or supplies.5. Planning/getting job-related information

• Studying drawings, diagrams, manuals, or notes to obtain job related information (out of thework area).

• Performing calculations (out of the work area).

• Job-related discussion with foreman/between craftsmen.

• Making sketches.

• Using plant paging systems, plant phones, or walkie-talkies.

Downtime: non-activity, including:

1. Ready: ready to assist co-worker in a work activity or ready-to-work but “on hold’.2. Personal: all unexplained non-utilization or personal idle time

Additional Data: includes:

1. Un-accounted For: the percentage of craftsmen not observed during a sampling observation tour. It isthe difference between the correct headcount obtained from supervision or staff and the actualnumber of observations made by the Analyst.

2. Total Observations: the total number of actual observations made plus the number of 'unaccounted-for'; this should equal the headcount.

3. Foreman Availability (%): on each tour, the number of foremen observed in the work area with their

crews (visible to crew, within shouting distance, available and ready to assist any crew member) iscounted. Foreman Availability is calculated as a percentage by dividing the number of foremenobserved with their crews by the total number of foremen assigned on the project. The Foreman

Availability percentage is a rough indicator of first-line supervision’s effectiveness; typically, a direct,positive correlation is found with the Direct, Productive Work percentage.

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APPENDIX B. DATA COLLECTION FORM

Project: LABOR UTILIZATION – DAILY RESULTS Date:

Tour

Time

Direct,

ProductiveWork Activity

Indirect, Non-Productive

Work Activity

Downtime Additional Data Comments

T o ur N o.

S t ar t

F i ni s h

H an d s On

A s s i s t

A d j u s t

E q ui pm en t

W al k w / T o ol s

/ M a t er i al s

W al k E m p t y

W ai t a t

E l ev a t or

W ai t a t T o ol

C r i b

P l anni n g

R e a d y

P er s on al

T o t al

O b s er v a t i on s

Un- a c c o un t e d

F or

F or em en

A v ai l a b l e

F or em en

P o s s i b l e

Shift Totals / Avg.

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APPENDIX C. FOREMAN SHEET

Technician:_______________________________

Partner: __________________________ Date: ________________________________ _

Location: _________________________ Shift: ________________________________ _

Weather Conditions

Clear Raining Ice, Sleet, Etc. (How Long _____hrs)

Cloudy Snow

Rain (How Long ____ hrs) High Winds Temp ____° F

Foremen Information

Foreman #Men Where Foreman #Men Where

Miscellaneous Notes

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Hands-On, 49%

Assist, 7%

Adjust Equipment,

2%

Walk w/

Tools/Materials, 3%

Walk Empty, 12%

Wait at Elevator,

3%

Wait at Tool Crib,1%

Planning, 5%

Ready, 15%

Personal, 3%

APPENDIX D. SAMPLE DAILY PIE CHART REPORT FORMAT

Example chart of labor hour utilization by work category with actual observed percentages as might beused for a daily report.

DOWNTIME

DIRECT,PRODUCTIVE

WORK

INDIRECT,NON-PRODUCTIVE

WORK

10003 Observations55.3% Foreman Availability7.6% Un-accounted For

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APPENDIX E. SAMPLE TREND CHART

20

40

60

80

100

120

140

160

180

200

220

240

260

280

300

Crew Size

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

Percentage

2/12 2/14 2/16 2/18 2/21 2/23 2/25 2/28 3/1 3/3 3/6 3/83/10 3/13 3/15 3/17 3/20 3/22 3/243/27 3/29 3/31 4/3 4/5 4/7 4/10 4/12 4/14

Crew SizeForeman Avail

DowntimeIndirect WorkDirect Work

Cum DW

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APPENDIX F. SAMPLE SCATTER DIAGRAM OF PRODUCTIVE WORK PERCENTAGE MEASUREDON TOURS VS. TOUR START TIMES

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APPENDIX G. SAMPLE RANDOM TIMES TABLE

RANDOM TOUR START TIMES (5 min. intervals - hours/mins. from shift start)

0:20 0:10 0:25 0:15 0:25 0:20 0:15

0:55 0:55 0:45 1:00 0:30 0:25 1:10

2:30 1:10 1:05 1:25 0:40 0:55 1:25

3:05 1:45 2:20 1:55 1:00 1:20 1:40

3:25 2:05 2:30 2:45 1:40 1:35 1:45

4:00 2:50 3:40 3:50 2:15 1:55 2:40

4:10 3:20 5:00 4:25 2:20 2:30 2:55

4:55 3:30 5:45 5:10 2:30 2:45 3:45

5:00 4:45 5:55 6:20 2:45 3:35 4:55

5:55 4:55 6:00 6:25 3:35 4:05 5:15

6:45 5:00 6:45 6:50 4:00 5:00 5:45

6:50 6:05 7:45 6:55 4:15 6:25 6:25

7:10 7:10 7:55 7:15 6:25 7:20 6:35

7:25 7:35 8:25 7:40 7:30 7:40 7:50

8:20 8:15 8:40 8:25 8:05 8:20 8:10

9:55 8:25 9:10 8:30 8:15 8:30 8:2010:00 9:40 9:20 9:05 8:40 9:30 9:35

10:30 9:55 9:30 9:25 9:30 9:50 10:40

10:40 10:00 10:25 10:20 9:45 10:25 10:55

11:10 10:30 10:35 11:25 10:25 11:10 11:35

11:50 11:10 10:40 11:45 12:15 11:50 12:35

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APPENDIX H. ABSOLUTE ACCURACY AT 95% CONFIDENCE

To determine absolute accuracy Aa% at values of proportion p % and number of observations N , at 95%

confidence level, according to the formula ( ) N p p Aa /12 −=

p% ± 1% ± 2% ± 3% ± 4% ± 5%

1/99 396 99 44 25 162/98 784 196 87 49 313/97 1164 291 129 73 474/96 1536 384 171 96 615/95 1900 475 211 119 766/94 2256 564 251 141 907/93 2604 651 289 163 1048/92 2944 736 327 184 1189/91 3276 819 364 205 13110/90 3600 900 400 225 14411/89 3916 979 435 245 157

12/88 4224 1056 469 264 16913/87 4524 1131 503 283 18114/86 4816 1204 535 301 19315/85 5100 1275 567 319 20416/84 5376 1344 597 336 21517/83 5644 1411 627 353 22618/82 5904 1476 656 369 23619/81 6156 1539 684 385 24620/80 6400 1600 711 400 25621/79 6636 1659 737 415 26522/78 6864 1716 763 429 27523/77 7084 1771 787 443 28324/76 7296 1824 811 456 29225/75 7500 1875 833 469 300

26/74 7696 1924 855 481 30827/73 7884 1971 876 493 31528/72 8064 2016 896 504 32329/71 8236 2059 915 515 32930/70 8400 2100 933 525 33631/69 8556 2139 951 535 34232/68 8704 2176 967 544 34833/67 8844 2211 983 553 35434/66 8976 2244 997 561 35935/65 9100 2275 1011 569 36436/64 9216 2304 1024 576 36937/63 9324 2331 1036 583 37338/62 9424 2356 1047 589 37739/61 9516 2379 1057 595 381

40/60 9600 2400 1067 600 38441/59 9676 2419 1075 605 38742/58 9744 2436 1083 609 39043/57 9804 2451 1089 613 39244/56 9856 2464 1095 616 39445/55 9900 2475 1100 619 39646/54 9936 2484 1104 621 39747/53 9964 2491 1107 623 39948/52 9984 2496 1109 624 39949/51 9996 2499 1111 625 40050/50 10000 2500 1111 625 400

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APPENDIX I. EXAMPLE ACTION ITEMS LIST

ACTION ITEMS LISTSITE/PROJECT NAME:

CURRENT DATE:

ItemNo.

DateReported

Obstacle to ProductiveWorker Utilization

Action Plan ResponsiblePerson

Due Date Status CompletionDate

1 01/08 Craftworkers walking w.materials; lay-down areadistant(ft)

1) Assign expediters to bringmaterials to crafts in work areas

2) Review workflow planningprocedure

SiteSuperintendent

02/08 Assignedexpediters

02/08

2 03/08 Long waits at start/endshift as crew sizeincreases

1) Open additional service window2) Add assistants when needed3) Review tool control policy

SiteSuperintendent

05/08 Done 07/08

3 04/08 Craftworkers waiting whileequipment is refueled

Fuel equipment in evening for nextday

Fuel TruckOperator

04/08 Beingdone as oftoday

04/08

4 04/08 Craftwokers waiting inwork areas for unknown

reasons

1) Review manpower schedulingprocedure

2) Balance with do-able workload

SiteSuperintendent

05/08

5

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